Bitcoin Dives as Dollar Holds Firm, Breaking Long-Standing Pattern

Bitcoin's recent decline has broken a pattern that dated back to 2015. Since May, Bitcoin has fallen more sharply than the US dollar, a divergence that challenges investor expectations.

The dollar index (DXY) has held above 100, indicating a strong dollar and tighter global liquidity. This typically creates headwinds for risk assets like Bitcoin, which has behaved more like a speculative asset in 2026.

Bitcoin reached an all-time high near $126,000 in October 2025 but fell to around $63,000 by August 1, 2026, representing a 50% drawdown. This decline comes despite institutional adoption and ETF inflows that fueled the earlier rally.